Real Estate Appraisals vs Property Valuations
There are a lot of people unaware that there is a difference between a property valuation and a property appraisal. Naturally, you can assume that these two words are one and the same. However, legally there is a big difference when it comes to property and real estate. An appraisal is typically offered free of charge by a real estate agent as to their estimate of the property’s worth. A valuation by a registered valuer comes with a fee.
By definition, an appraisal is an act of assessing something or someone.
A valuation is: “an established, ethical and evidence-based process for assessing the monetary value of an asset at a specified date, that is legally defensible and undertaken by a qualified, professional Valuer.”
Who is more accurate in projecting the sale price?
Real Estate Agent – A real estate agent could be privy to information the valuer is unaware of. For example, an agent may have recently sold a home 2 doors down or 2 streets away. This sale may have been done by private treaty with the sale going to the highest bidder. The agent will know what other losing bidders were willing to pay for the home. So, if a house that comes on the market similar to the one just sold it would be safe to assume the agent has a fair idea of the expected bids.
Valuation – Commonly if a Court is involved in a dispute it may direct the parties to engage a registered valuer as a resolution. Or, the property may be part of a deceased estate. So a definite value would be required. There may be other reasons such as mortgage lenders being asked for finance. The owner must employ the services of a licenced valuer. On completion of this task, the valuer will furnish the client with a written report and an invoice to pay for their services.
Appraisal – This is the professional estimate of the sales agent. It is to be considered as a reference to the expected price. This appraisal is generally based on recent sales and knowledge of the real estate trends in the local area. Appraisals do not stand up in court as they have no legal basis. An owner may simply want to know what their property is worth in the current climate. Or, they are wanting to sell and doing their due diligence and homework.